Monday, May 5, 2008

Who knew there was such a thing as "premium" light beer? Or, more precisely, who knew that Miller Lite is considered a "premium" anything?! But, it's still an interesting question.

Given the economic downturn, and beer's status (particularly craft beer's) as a luxury item, will people start turning to beers like Busch Light, Old Milwaukee and Milwaukee's Best instead of drinking Dogfish Head 120 by the case? According to Miller Brewing's henchman over at Ye Olde Brew Blog, "wide price gaps can encourage people to trade down."

Currently, the going price for a six of New Glarus Seasonal seems to be around $7.99; a case of the stuff will set you back a cool $32. Compare that with $17.49 for a 30-pack of Busch Light. A price gap of $14.50. The price gap between Miller Lite, a "premium light beer," and Busch Light, presumably not a "premium light beer," is $4.33, up from only $3.94 a year ago; and Miller is worried about defectors.

So, is a widening a price gap going to make you change your beer drinking habits? If not, what price reducing tactics, if any, do you intend to take?

Here at MBR we're hoping to get more free beer.

By the way, who determines whether a beer is, or is not, a "premium" light beer? (That's a serious question. If you know the answer or have a marketing data sheet breaking down beer into such categories, I'd love to see them.)

2 comments:

I’m not a beer marketer nor do I work on the retail side of things but I have some hunches.

In order to “trade down” I think the consumer would have had to have previously been a swill drinker. Enough consumers have tasted the macro beers enough to know exactly what it tastes like. This begs the question, why are they buying beer in the first place and what are their priorities? Is it to consume alcohol in a preferred delivery device? Is it to enjoy something they like to taste? It also depends on the type of beer they like to consume – light or heavy. I hate to say it, but the “less filling” factor comes into play a lot. This last point may be the most significant when it comes to consumers that like Spotted Cow or a similar “lighter” beer in the first place. These people may indeed “trade down”. The college student on a budget who really likes craft beer, but also really wants to get a buzz may opt to buy the case of Miller vs. Dogfish Head, but this has always been the case. The person who likes craft beer is probably going to keep buying it, but just less of it. The major brands might be more recession proof and probably won’t see their sales drop as much as the craft segment may, but with growth in popularity of crafts, they are likely to continue to make inroads in terms of market share. I think everyone will be impacted and percentage wise craft will continue to grow, albeit at a slower rate, and the majors will hold their own. I plan on cutting down a little, and continuing to brew my own.